GBP/AUD Market Update
Dec 9th 2008, 11:28 am
#1
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Joined: Dec 2004
Posts: 524
GBP/AUD Market Update
Hi All,
As requested - the latest market update.
High & Low of the month:
High: 2.4326 (on the 20/11/08)
Low: 2.2040 (on the 14/11/08)
Difference of cost on £200k:
High: $90,744.11
Low: $82,216.56
So a difference of $8,527.54
The Australian Dollar advanced against the Pound at the beginning of the month after the Reserve Bank of Australia surprised investors with a more aggressive interest rate cut than expected. The Central Bank lowered its main lending rate by 0.75% to 5.25% and warned more cuts were in the pipeline. The RBA said financial market conditions remained turbulent and expressed more concern about growth in emerging markets than in its previous statement, particularly in China.
However, the Aussie pared gains thereafter as mounting worries about a global economic slowdown offset strong domestic data and kept investors wary of higher-yielding currencies.
With GBP/AUD failing to sustain above the 2.4000 level, Sterling prices now look vulnerable to further short term weakness as GBP/AUD heads towards 2.2500 and 2.2000 next. Such deterioration is still seen as part of the ongoing range here with bearish risk effectively limited in broad terms.
The Australian Dollar came under renewed pressure against the Pound at the end of the month as increasing risk aversion prompted foreign investors to repatriate funds. The Aussie was not helped by minutes of the Reserve Bank of Australia’s November meeting that showed escalating concern about the impact that global gloom and the loss of household wealth were having on business and consumer confidence. Indeed, the economic outlook dimmed so rapidly at the start of November that the board chose to cut by 0.75% to 5.25%, when the initial recommendation was 0.50% just a few days earlier. However, a battered AUD partially erased losses at the end of the week as excess volatility prompted the RBA to intervene and support the currency. Although re-emergent Sterling strength could be seen as part of a short term range, the inability to remain above 2.40 has nevertheless clearly damaged the previous bullish scenario, with GBP/AUD range bound at best for the time being. Expect selling pressure to emerge at 2.38 initially and until GBP/AUD establishes itself back beyond 2.40, recovery attempts will be seen as corrective and thus unsustainable. Further near term weakness looks likely in the meantime as the market gravitates towards 2.20 next, and whilst selling pressure should ease thereafter, an eventual extension to 2.15 can still nonetheless unfold. The Australian Q3 data calendar kick off at the end of the month, with the capital expenditure figures proving the key highlight.
Going forward most industry analysts expect continued volatility. No surprises there!
Whilst FX isn't the most thrilling of subjects, the sooner you begin to think about your money transfers, the more likely are to make your money go as far as you do.
Best Regards
Mark Bodega
Director - HiFX
As requested - the latest market update.
High & Low of the month:
High: 2.4326 (on the 20/11/08)
Low: 2.2040 (on the 14/11/08)
Difference of cost on £200k:
High: $90,744.11
Low: $82,216.56
So a difference of $8,527.54
The Australian Dollar advanced against the Pound at the beginning of the month after the Reserve Bank of Australia surprised investors with a more aggressive interest rate cut than expected. The Central Bank lowered its main lending rate by 0.75% to 5.25% and warned more cuts were in the pipeline. The RBA said financial market conditions remained turbulent and expressed more concern about growth in emerging markets than in its previous statement, particularly in China.
However, the Aussie pared gains thereafter as mounting worries about a global economic slowdown offset strong domestic data and kept investors wary of higher-yielding currencies.
With GBP/AUD failing to sustain above the 2.4000 level, Sterling prices now look vulnerable to further short term weakness as GBP/AUD heads towards 2.2500 and 2.2000 next. Such deterioration is still seen as part of the ongoing range here with bearish risk effectively limited in broad terms.
The Australian Dollar came under renewed pressure against the Pound at the end of the month as increasing risk aversion prompted foreign investors to repatriate funds. The Aussie was not helped by minutes of the Reserve Bank of Australia’s November meeting that showed escalating concern about the impact that global gloom and the loss of household wealth were having on business and consumer confidence. Indeed, the economic outlook dimmed so rapidly at the start of November that the board chose to cut by 0.75% to 5.25%, when the initial recommendation was 0.50% just a few days earlier. However, a battered AUD partially erased losses at the end of the week as excess volatility prompted the RBA to intervene and support the currency. Although re-emergent Sterling strength could be seen as part of a short term range, the inability to remain above 2.40 has nevertheless clearly damaged the previous bullish scenario, with GBP/AUD range bound at best for the time being. Expect selling pressure to emerge at 2.38 initially and until GBP/AUD establishes itself back beyond 2.40, recovery attempts will be seen as corrective and thus unsustainable. Further near term weakness looks likely in the meantime as the market gravitates towards 2.20 next, and whilst selling pressure should ease thereafter, an eventual extension to 2.15 can still nonetheless unfold. The Australian Q3 data calendar kick off at the end of the month, with the capital expenditure figures proving the key highlight.
Going forward most industry analysts expect continued volatility. No surprises there!
Whilst FX isn't the most thrilling of subjects, the sooner you begin to think about your money transfers, the more likely are to make your money go as far as you do.
Best Regards
Mark Bodega
Director - HiFX
